The Coöperatives--an Experiment in Civilization
I
THE General Secretary of the Coöperative League, Mr. E. R. Bowen, advises us that ‘we are at the end of an era’ and that ‘the change now in process is from capitalism to Consumers’ Coöperation.’ An investigation of the foundations of such a startling claim is important to all concerned, and quite clearly all are concerned — none more than consumers.
An inevitable by-product of the publicity emanating from President Roosevelt’s European commission on coöperatives has been new attention bestowed upon the institution which the Rochdale textile workers initiated ninety-two years ago. Codperators in this country and abroad were naturally elated by the appointment of the presidential commission of investigation. Until recently, European cooperators described the United States as ‘a barren coöperative desert.’ The latest issue of the People ’s Year Book, which is a publication of the British coöperative movement, hailed President Roosevelt’s ‘swing to the Left,’ evidence for which it found in his recognition of the Stockholm — not the Moscow — way.
Eight years from now we may expect an impressive celebration of the Rochdale centennial, commemorating the decision of a group of poverty-pinched English weavers to become their own retailing distributors. With a view to extending the purchasing power of their meagre incomes, these weavers devised a coöperative method for the elimination of private enterprise in the field of distributing consumers’ goods. The rules which these pioneer consumer-coöperators formulated for the conduct of their enterprise have been called ‘the first declaration of consumer independence.’ As set forth in a recent statement of the International Coöperative Alliance, the essential principles governing a true Rochdale coöperative are (1) voluntary and unlimited membership; (2) democratic control: one member, one vote; and (3) dividends to each member in proportion to his purchases. Other principles, less universally applied, are (1) limited interest on capital investment, (2) goods to be sold for cash only, (3) goods to be sold at prevailing market prices, (4) appropriation from surplus savings of sums for education and ‘the general social good of the members,’ (5) political and religious neutrality.
From its humble Rochdale weavers’ origin stems a world-wide consumercooperative movement which numbers, according to coöperative reports, at least one hundred million members. Its recent growth in the United States, which has been ‘coöperatively’ a backward country, has been considerable. Current estimates among enthusiastic coöperators and frightened private retailers alike place the number of members in the United States at two million families and the business turnover for 1936 at $500,000,000. As a matter of fact, these estimates are much too high, for they include numerous associations of farmers who have banded together for the coöperative purchase of their producers’ goods, such as gas and oil for the operation of farm machinery, seed, fertilizer, and baby chicks. A pamphlet published by the Midland Coöperative Wholesale makes the obvious point that ‘the joint purchase of certain supplies’ by farmers does ‘not constitute consumers’ cooperation,’ but less careful propagandists for the movement ignore the important distinction between consumers’ and producers’ goods. The records will show that most of what is included in the growth of consumers’ coöperation in the United States amounts to a farmers’ movement for the rationalization of agricultural production.
Discounting the exaggerated claims of both friends and foes of consumers’ coöperation, it is nevertheless true that consumers’ cooperatives in the United States are multiplying rapidly. The impetus behind this growth is multiform. Government recognition and, in a lesser degree, government sponsorship, the pressure of the long-continued economic crisis upon consumers, abuses in the prevailing system of distribution, energetic coöperative propaganda, including the nation-wide tour of the Japanese religious and coöperative leader, Kagawa, and a vague but favorable reaction to the noncombative word ‘coöperation’ in a world beset with cruel and bitter conflicts, are among the factors which must be considered in accounting for the new vogue.
In spite of exaggerated reports, it is far easier to ascertain the growth of coöperative membership and the volume of coöperative business turnover than it is to comprehend the movement’s social relationships. In the latter we are confronted with irreconcilable contradictions present in the coéperative movement nationally and internationally. American investigators who cross the Atlantic expecting to find a single and somewhat consistent social pattern labeled ‘consumer coéperation ’ will discover, through even casual inquiry, that the label is applied to groups of the most diverse nature. True, there is an International Coöperative Alliance, an extremely loose federation, in which the national cooperative organizations of some forty countries are brought together, but the totality of their membership is about as significant socially as the lumping together of the populations of the member states of the League of Nations. Some of these national organizations accept the principles which the Rochdale weavers formulated, while others are guided by drastically revised versions of the Rochdale rules.
The head of an American consumers’ coöperative speaks of ‘ the integral connection between the coöperative, the socialist, and the communist movements of Europe.’ This is a case of wishful thinking to be attributed to this individual coöperator’s own bias toward the Left. One European cooperative group asserts its absolute political and religious neutrality, while another, through choice or compulsion, openly takes sides. In France, a cooperative leader declares that ‘absolute liberty is at the basis of coöperation,’ and, elucidating this French coöperative liberté, adds: ‘The society is open to consumers, whatever their opinions, or their manner of thinking. It forbids every act contrary to this principle. It ignores all conflict, whether political or religious.’ In Belgium, on the other hand, the Société Genératé Cooperative is affiliated with the Belgian Labor Party. This left-wing cooperative group reports with pride that it contributes, year in and year out, more than ten million francs annually to socialist organizations, and then concludes with the admonition: ‘Therefore, buy everything in coöperative shops.’ In Finland consumer coöperators are split into two groups, the socialist K.K., and the antisocialist S.O.K. In Holland there are three organizations, one for Protestants, another for Catholics, and yet another which is religiously unattached. Germany, Italy, and the Soviet Union have ‘coördinated’ their consumers’ coöperatives into their totalitarian systems. France, England, Sweden, and Switzerland have consumer cooperation and capitalism juxtaposed in widely varying degrees of competition.
In the Proceedings of the SixtySeventh Annual Cooperative Congress of Great Britain, 1035, a national executive charged British trade-union leaders with ‘trying to create ill-will and to cause dissension’ and with never losing ‘an opportunity of decrying and belittling the [Cooöperative] Movement in its relationship with its employees.’ In the United States, the general manager of the Central Cooperative Wholesale reports that after a ‘six-year relentless Communist attack directed against the Central Cooperative Wholesale and its membership’ the Communists have approached his eobperators ‘with flowery words and nice-sounding proposals,’ but, he observes, ‘no more than a leopard may change his spots have the Communists changed their aim to capture the control of our Wholesale.’ With an entirely different orientation, another Rochdale consumers’ cooperative in the United States takes the position that the cooperatives are to constitute ‘the Quartermaster Corps ’ whose principal duty shall be to ‘feed, clothe, and house’ the Army of Labor and thus be ‘a decisive factor in winning strikes.’ It is impossible to avoid the conclusion that the social and political situation and the economic pattern of the cooperatives are highly muddled, both abroad and in the Linked States. Are the cooperatives mere adjuncts to the labor and radical movement, or are they politically neutral agencies of the consumer?
Outside the coöperative movement also, there is a confused and discordant chorus of appraisal. Mr. Roosevelt’s Secretary of Agriculture, Henry A. Wallace, has commended consumer cooperatives as a bulwark of democracy against dictatorship (although their functioning in this respect did not appear to be a matter of any significance whatever in Russia and Germany, both of which had very large cooperative movements prior to the establishment of their present regimes). In an official pamphlet, the United States Department of Labor admonishes cooperators to remember at all times that ‘ cooperation is not merely a business’ but ‘an experiment in a different kind of civilization.’ (It will strike some as a singular circumstance that the Department of Labor should consider itself authorized or fitted to appraise and commend new patterns of civilization.) Views current in business circles contrast sharply with these official New Deal opinions. To the executive vice president of Food and Grocery Chain Stores of America, consumers’ cooperatives are a ‘Frankenstein monster.’ In an independent, anti-chain publication the coöperatives are described as ‘silly sister clubs’ which threaten nevertheless to become the ‘worst menace to American democracy.’
While private mercantile enterprises rage or shrink in fear when they contemplate the growth of consumers’ coöperatives, while officeholders begin to manœuvre for their reputedly important electoral support, and while political groups of the Right and the Left seek to subvert them for their own ulterior purposes, it is possible that the paramount interests of the consumer in the question of the coöperative form of manufacture and distribution may be forgottenOf all the interests affected, those of the consumer, which are most fundamental, are least likely to find clear and articulate emphasis.
II
The consumer’s interest in the marketing of his goods is not concerned exclusively with price considerations. Price is only one aspect of the problem of the consumer’s standard of living, and it cannot always be said to be the paramount consideration even when poverty levels of subsistence are present. Useless, harmful, hazardous, or fraudulent merchandise is too dear at the lowest conceivable price levels. Concealed shoddiness in goods may make low prices an illusory bargain. The consumer is concerned not only with what he pays for an article, but also with what the seller claims for it, with what he can or cannot do with it after he has obtained possession of it, and with its effects upon his health. It is the price per unit of performance that is really significant to the consumer, and not simply the absolute price in terms of the currency. The consumer is, in addition to these considerations, vitally affected by the techniques of merchandising quite apart from the intrinsic merits of the merchandise which he buys. So far as the consumer is concerned, the expanding of his purchasing power to bring within his reach a larger amount of useless, harmful, or fraudulent goods is not a meritorious feature of any device or system of distribution, private or coöperative. It is this fact which must be kept in mind when investigating the relative usefulness of consumers’ cooperatives; it is precisely with this fact that the President’s European commission ought to concern itself concretely.
Irrelevant merchandising appeals of one kind or another are, we find, employed by most consumer coöperatives. Even the peculiarly irrelevant testimonials of Hollywood movie stars are used to sell goods across the coöperative counter in London, Brussels, and Paris. A great coöperative department store in Stockholm, probably the largest institution of its kind in the world, features as its main advertising copy the information that Greta Garbo once sold hats in the building, in spite of the fact that the coincidence occurred some years before the Kooperativa Förbundet owned the place. America hardly needs to import foreign skills in this line of advertising.
For technically tricky and misleading language, it would be difficult to surpass the claim of a brand of coöperative aspirin tablets that they ‘are far in advance of other and inferior brands.’ The strictest interpretation of the statement, of course, means simply that they ‘are far in advance of inferior brands.’ If, however, the statement is interpreted to mean ‘far in advance of other brands and inferior brands,’ it is wholly untrue, for there are ‘other brands’ which the coöperative product does not at all surpass. Indeed, the range of quality in brands of aspirin is so small as to be negligible, and nothing except unlikely and inexcusable carelessness in manufacture could account for any important deviations from the standard quality long established by the drug trade and by governments for this product. It is therefore a grossly exaggerated claim in respect to any standard remedy to state that the coöperative article or any other is ‘far in advance’ of another brand. The Federal Trade Commission in the United States clamped down on the makers of a popular brand of aspirin for indulging in similar competitive claims of superiority.
But this coöperative’s claim for its own brand of aspirin does not stand alone; it is typical of the movement’s indulgence in superlatives about itself and its merchandise. French coöperative apple jelly is said to be made with ‘extra pure sugar.’ The Belgian Consumers’ Coöperative Society states that its products are of ‘incomparable quality.’ British cooperative cigarettes are said to be made of ‘super Virginia’ tobacco. Cooperative soaps are said to be ‘extra superior,’ and chocolate bars are advertised as ‘de luxe’ and ‘extra fine.’ With respect to any restraint in the use of soaring words and adjectives in the superlative, the cooperative movement certainly is not ‘far in advance of other and inferior brands’ of merchandising systems.
The British coöperative tooth paste outdoes, in its claims, all of its American competitors in private enterprise. On the carton of the coöperative product we read: ‘Makes teeth like pearls. Kills germs, firms the gums, makes teeth sparkle, removes stains and film. Makes dull teeth white.’ Most of these claims are spurious.
Varicolored Sulphur Tablets, each one embossed with the word ‘CO-OP,’ are recommended ‘for the blood and complexion.’ Three times on the carton, thus driving the point home, appears an appeal to little coöperative guinea pigs: ‘Children like them’; ‘Particularly pleasing to children’; ‘A great favorite with the children.’ The formula of this nostrum discloses clearly enough the reason for this childish predilection. The tablets contain 58 per cent sugar — significantly named ‘saccharose’ on the carton rather than by a name the parent will understand — and 18.32 per cent cornstarch, described with its scientific name ‘amylum.’ Concerning the sulphur content, which is 15.26 per cent of the whole, Cushny’s Pharmacology and Therapeutics, a leading authority, warns that ‘sulphur is in itself an inert body’ and most of it passes through the alimentary canal unchanged, but ‘some of it forms sulphides in the mucous membrane of the intestine, and these cause irritation, especially in the large bowel ... in large quantities it has caused, in some instances, more severe symptoms.’ The additional ingredients, cream of tartar and tartaric acid, which are not properly used as medicines at all, may harm the liver and kidneys and certainly should not be used in any medicine which children are encouraged to take. Finally, a remedy sold in ‘assorted fruit flavors particularly pleasing to children’ is evidently to be consumed as casually as though it were candy.
On a tin of Health Salt, a familiar saline laxative of habit-forming character, the British cooperatives describe their nostrum as a ‘perfect substitute’ for ripe fruit. A more preposterous or disingenuous claim would be hard to imagine, whether under private enterprise or coöperation.
Bismuth Digestive Tablets, dispensed under the brand name of the London Coöperative Society, are offered to cooperating consumers to ‘make eating worth while.’ The principal ingredients of this all-too-promising remedy are: sugar (termed ‘sucrose’ on the label), 50 per cent; milk sugar (given the higher-sounding name of ‘lactose’), 9 per cent; and precipitated chalk, 22.5 per cent. It is perhaps unnecessary to say that this product will fall far short of its claims of making eating worth while or ‘ridding aftermeal discomfort.’
A coöperative tonic recommended for debility, nervousness, brain fag, impure blood, rheumatism, and gout, among other disorders, contains 84.899 per cent aqua destillata (‘distilled water’ to most of us). Of this nostrum it is said that ‘a few drops in a glass of sherry form a delightful health-giving appetizer and digestive.’ Obviously that depends on whether the consumer likes sherry or not, since the ‘few drops’ of the tonic are indistinguishable when placed in a glass of the wine. With the exception of the distilled water in this Victorian-era tonic, all of its ingredients, among which may be mentioned the compounds of the drugs cinchonin, cinchonidin, and quinine, are either useless or undesirable for human ingestion except under medical prescription and medical observation.
Vitamin Yeast Tablets bearing a cooperative brand name are declared erroneously on the carton in which they are packed to ‘contain nothing harmful.’ This is apparently one of the old ‘shotgun’ remedies, as it is recommended ‘for Stomach, Liver and Kidney Disorders, Indigestion, Headaches, Brain Fag, Rheumatism, Skin Eruptions, Constipation, and Biliousness.’ It is, to say the least, misleading and wholly unfair to the pharmaceutically uneducated consumer to term any product ‘Vitamin Yeast Tablets’ which contains caffeine, amidopyrine, acetphenetidin, and two bromides as its active ingredients. This is exactly the same device which in the United States has been employed by a famous American quack remedy, containing yeast, a laxative, and a nerve stimulant (nux vomica) — a remedy which sold widely because the consumer assumed that he was using something which was more akin to a healthful, wholesome food than to medicine.
Iodized Concentrated Compound Extract of Sarsaparilla, with the brand name of the London Coöperative Society, is presented as ‘The Great Blood Purifier’ and recommended ‘for curing all disorders arising from an impure or impoverished condition of the blood,’ a claim which in the United States could not be made for any product, whatever therapeutic substances it contained, to be shipped in interstate commerce or sold in the District of Columbia without its maker’s running afoul of the law. It is perhaps unnecessary to say that there is no medicinal substance or combination of substances known to medicine which gives even hope of curing all or many disorders arising from an impure or impoverished condition of the blood. With reference to this nostrum it is sufficient to quote the United States Dispensatory: ‘The use of sarsaparilla in medicine is an interesting example of the power of superstition to survive the attacks of truth and reason.’
It would be safe to say that most of the European cooperatives’ medicinal products would have difficulty with the Federal Trade Commission or the Food and Drug Administration in the United States. The British coöperative Pile Ointment carries the following plainly untruthful claim: ‘If used as directed on the tube this Pile Ointment will not only be found effective in curing Piles, but also in preventing the conditions conducive to their return.’ Such a claim has been illegal under the federal Food and Drugs Act and in most of the states of the United States for thirty years.
The shelves of European cooöperatives are well stocked with nostrums and quackeries. Perpetuating the hoary superstitions of the age of pre-scientific medicine, they reveal the absurdity of the notion that the profit motives of capitalism underlie in some unique way the frauds that are practised upon consumers. What the state of medical knowledge or the character of merchandising practices may be in some far-off coöperative utopia is beside the point. For the present, at least, the clientele of the coöperatives is subject to the hazards of quackeries which appear wholly inexcusable in a time of rapid scientific advance. No capitalist system of distribution could be more dangerous, and the American system of private pharmacy is superior to the cooperatives’ at every point.
For the unsuspecting consumer going on a picnic, the British coöperatives offer a concoction from which ‘fruit’ drinks may be made. A recent announcement of the United States Department of Agriculture reports the seizure of a number of ‘frauds on the purchaser’ among which were ‘320 packages of so-called “fruit crystals,” consisting of sugar, tartaric acid, artificial color and citrus oils.’ When a government department whose main duty is the protection of agricultural producers so far outdoes a consumer’s coöperative organization in the protection of consumers, we are confronted with the obvious fact that institutions’ names are sometimes defective carriers of their meanings and purposes.
The publications of the coöperative movement are no safer as guides for consumer habits than are its products for indiscriminate use. In a recent number of the Belgische Samenwerking, the Flemish edition of the monthly journal of the Société Générate Coopérative, we find the following advice: ‘Belgians, who are menaced in your dietary by the crisis, make a more ample use of sugar in your daily eating. Sugar is the best source of musclepower, and in addition it is far and away the least expensive food.’ The statement is signed by the Chief Health Inspector of the Belgian Government, Dr. Louis Delattre. It would be difficult to imagine a more grave dietetic error than this recommendation. It would be hard to contravene more completely in a few words what modern medicine and nutrition have to say on the subject of sugar in the diet. The sole nutritive function of sugar, according to authoritative opinion in Belgium as in America and England, is to supply the body with fuel or energy, but unless it is consumed in extreme moderation, at appropriate times in relation to meals, and in certain forms, its use may seriously unbalance the diet by destroying the appetite for such essential body-building and body-sustaining foods as meats, eggs, vegetables, and fruits. When a consumers’ coöperative periodical such as the Belgische Samenwerking prints the quoted statement of Dr. Delattre prominently in a printer’s box and in italics, without troubling to make the simplest and most obvious critical examination of the problem from the medical and consumer standpoint, it not only assumes grave responsibility for misleading its consumer constituency, but also offers evidence to the effect that zeal for a particular form of social organization will often so far outrun technical knowledge of the consumer’s health requirements that the whole aim of the movement is discredited and its competence to do any sort of responsible and disinterested service to consumers opened to doubt.
III
Turning our attention to those types of consumers’ goods which require some kind of mechanical testing to determine quality, we quickly find that the shortcomings of the coéperatives are not limited to the vending of medicinal nostrums and quackeries and to nutritional ignorance.
For good or ill, this is an age in which men generally shave their beards. Much male comfort or discomfort depends upon the microscopic quality of the little piece of steel with which the beard is removed. In a test of nine razor blades, six of which were made and sold by private enterprise and three of which were cooperative blades from as many countries, the cooperative blades rated sixth, seventh, and eighth respectively in comparative initial sharpness, and sixth, seventh, and ninth in durability. The following tabulation indicates the approximate relative use-values of the blades, 100 representing the most satisfactory cutting edge:—
| Initial Sharpness | Durability | ||
| Capitalist blade | No. 1 | 100 | 100 |
| ” ” | No. 2 | 100 | 100 |
| ” ” | No. 3 | 83 | 90 |
| ” ” | No. 4 | 62 | 83 |
| ” ” | No. 5 | 56 | 83 |
| Cooperative | No. 1 | 50 | 71 |
| ” ” | No. 2 | 50 | 71 |
| Capitalist ” | No. 6 | 41 | 70 |
| Cooperative ” | No. 3 | 45 | 02 |
When the cost per shave based upon the relative cost and performance of the blade is considered, the comparisons are exceedingly unfavorable to the coöperatives’ blades. On this basis, capitalist blade No. 1 would give twenty-four times the service given by coöperative blade No. 2, which was not only of low relative quality, but was sold at an outrageously high price per blade.
In a test of American typewriter ribbons, it was discovered that a coöperative article selling for 55 cents gave less service than a ribbon of private enterprise which sells for only 20 cents. There was some difficulty in obtaining the coöperative ribbon, as the coöperators refused to sell their article when it was known that it was to be submitted to comparative tests. Too often a coöperative product is a sacred thing upon which critical hands must not be laid and in whose goodness one must believe willy-nilly.
A Rochdale consumers’ coöperative in the United States listed among the radios sold with its own trade-mark an instrument which showed exceptionally poor performance on test. Aside from the coöperative’s misleading advertising involved in the merchandising of this radio, an even more questionable procedure was discovered when a purchaser was sent to the private distributor, who supplied the cooperative, to take delivery of one of the instruments — the coöperative having none of the radios in stock at the time. In buying through the cooperative, the purchaser paid $1.80 more than he would have paid if he had gone directly to the private distributor, and furthermore he was compelled to wait while the private distributor removed his own trademark and substituted for it the trademark of the coöperative. Few consumers will wish, even for the privilege of supporting ‘an experiment in a different kind of civilization’ or a ‘Quartermaster’s Corps for the Army of Labor,’ to pay higher prices for identical merchandise, or to pay two visits instead of one to places of business, or to be inconvenienced by waiting to get a cooperative trade-mark on their goods instead of the name plate of a private enterpriser.
IV
The reasons why consumers’ coöperatives fail to meet any adequate test of serving the interests of consumers are rooted in the basic assumptions and methods of the cooperative movement.
In a pamphlet on The Coöperative Movement published by the Midland Coöperative Wholesale, we read that ‘the Coöperative Movement automatically stops the practice of short weights and improves the quality of all the necessities of life, because no one can benefit from dishonesty or poor quality.’ The General Secretary of the Coöperative League in the United States declares that ‘there is no reason for adulteration when consumers own their own business and buy for themselves.’ Statements such as these would in themselves be sufficient explanation for the situation which we have found in the quality and character of coöperative goods. To assume that the quality of goods is automatically improved by the simple device of eliminating the profit motive from distribution is to reveal a lamentable failure to comprehend the nature and importance of technology in the production of goods. Technological competence, care, and skill are not automatically conferred upon ten or a thousand persons by their decision to perform for themselves a function for which they have been paying others. There are no substitutes for technical skill and knowledge. Coöperative literature reveals a prevailing disposition to assume that the elimination of profit settles all the problems of goods and of distribution, including the one of quality.
High professions of mercantile virtue may be made in good faith but mean little or nothing in the absence of an awareness of the problem of quality and its relationship to technology. Last year the newly formed Retail Trading Standards Association of England (corresponding to the Better Business Bureau movement in the United States) launched a campaign in favor of ‘straightforward shopkeeping.’ Appropriately enough, it would seem, they invited the cooperative societies to become members of the Associat ion. The Coöperative Union declined the invitation with a statement that the work of the Retail Trading Standards Association had been anticipated by the Coöperative Union several decades before. In a letter to the Times, the General Secretary of the Coöperative Union quoted the Union’s first rule of membership which had been adopted many years ago. It reads: —
This Union is formed to promote the practice of truthfulness, justice, and economy in production and exchange; by the abolition of all false dealing either
(a) direct, by representing any article produced or sold to be other than what it is known to the producer or vendor to be; or
(b) indirect, by concealing from the purchaser any fact known to the vendor, material to be known by the purchaser, to enable him to judge of the value of the article purchased.
In the light of what we know about a considerable range of British cooperative goods and merchandising practices, it is impossible to give significant weight to this statement of the cooperatives’ code. Many a private enterpriser has in practice bettered the performance of the cooperatives, without ever having thought to express in writing so lofty a statement of principles.
Reports of coöperative gatherings show that the subject of quality in cooperative goods is sometimes raised by members. The answers of the management are so notably vague that they engender the suspicion that there is rarely or never any systematic and careful testing to ensure appropriate quality. At the 1036 annual meeting of the Central Cooperative Wholesale, discussion of the question of quality was closed ‘ by a motion instructing the management and staff of the Wholesale to exercise all possible care in the selecting of goods and maintenance of quality.’ Nowhere is there to be found a statement of the testing procedures and the extent of laboratory equipment, if any, used to ensure quality. Inquiries concerning these bring nothing more than vague assurances that the coöperatives produce and market only the best of everything, often accompanied by the highly ambiguous statement that coöperation is a system in which consumers write their own specifications for goods.
It is reasonable to suppose that if there were systematic and careful testing the leaders of the coöperative movement would be proud to give the details of such work to inquirers, and especially to broadcast them as an appeal for patronage. If perchance such laboratory methods and equipment exist, they have not been used, as independent tests of coöperative goods clearly disclose, to improve the quality of the Swedish coöperative cosmetics and razor blades, or of American coöperative hose and can openers, or of British coöperative medical supplies.
It has yet to be shown that appropriate qualities in consumers’ goods prevail in any system where consumer choice is not entirely free, or in other words where producers and distributors are not compelled to compete for consumer patronage by some degree of appeal to quality. Any kind of monopoly which tends to throttle consumer choice or limits it to a single product of a given line of goods is destructive of the necessary motive for production of high and continuously improving quality. The convinced and loyal consumer-coöperator who patronizes his cooperative because it is ‘an experiment in a different kind of civilization’ will not switch to a private competitor of the cooperative when he discovers that the CO-OP trade-mark is not a guarantee of good merchandise. By his attachment to the coöperative for a reason which is not related to the quality of goods, he fails to exert buyer pressure which is a necessary factor in encouraging quality production.
If consumer coöperation were extended to the point where all private enterprise disappeared (a consummation which most coöperators envisage when they assert that we are in transition from capitalism to consumer coöperation), an effective monopoly destructive of the consumer’s interests would be the inevitable result. Any totalitarian system of production and distribution involves this unhappy state of affairs. In so far as the individual coöperator loyally reserves his patronage for his coöperative he freely elects (in those countries where capitalism and coöperation still exist side by side) to forgo the principle of free consumer choice which to some degree, at least, encourages quality production. Free consumer choice and free private competitive enterprise are equally necessary for an adequate motive in quality production. The examples of quackery and low quality which have been cited in the case of consumer coöperatives are more than matched in the Soviet Union, where free consumer choice is effectively throttled by an entirely different form of totalitarian production and distribution; but that is another story for another discussion. Suffice it to say that neither a workers’ state nor a cooperative system has shown in practice the ability or even the clear intent to serve consumers as well as has private business enterprise.
The vision which coöperation holds before the consumer is compounded of an appeal to the ideal of economic democracy, on the one hand, and the price advantages of a rebate, on the other hand. The rebate — or the dividend, as it is called in accepted coöperative parlance — is so tangible a factor that it cannot be discontinued or interrupted without distinctly discouraging coöperators. It has constituted the chief drawing card, especially among workers of meagre incomes, to whom a quarterly purchase dividend makes a great appeal. Few if any coöperatives have organizations for production and distribution which can be compared with the most efficient establishments of private enterprise. This means that they begin with a financial handicap, to which must be added the imperative necessity of their rebating dividends, the consequence being that there is no margin left for competition in quality with the best of private enterprise. Furthermore, the coöperatives must set aside substantial portions of ‘surplus’ income for education and the general social good. These latter expenditures meet a practical promotional necessity for holding members which is not matched by the establishment of laboratories for testing. Coöperative appropriations to build ‘a better world constitute a drain upon resources which might, as some think, more properly go into the making of better goods. Few will deny the need for ‘a better world,’ but it is a dubious procedure to lay a sales tax upon consumers’ goods in order to pay the expenses for building such a world. Even if, as Secretary Wallace believes, consumer coöperatives were a bulwark of democracy against dictatorship, taxing the quality of consumers’ goods is a decidedly circuitous and inexpert approach to a problem which can and should be met directly by political action.
According to a recent annual report of an American Rochdale coöperative, less than one half the members voted in the election of the governing board. This would seem to indicate a substantial failure to appreciate the privilege of voting control of coöperative enterprise. Furthermore, as in the case of practically all corporations, the same board is elected year in and year out. These perennial boards of consumer coöperatives would be examples of wholly inexplicable deviations from normal human behavior if they were not concerned to make a good showing in their annual reports. Some coöperative protagonists would have us believe that the boards of consumer coöperatives are completely indifferent to balance sheets and annual business turnover, but such indifference is impossible. There is manifest among cooperatives a drive to sell merchandise, which is not associated with the profit motive but which is nonetheless powerful in an energetic and ambitious coöperative manager. In 1931, Stalin delivered a stinging rebuke to Soviet consumer cooperatives for being ‘concerned most of all with their balance sheets.’ ‘They are,’ he said, ‘infected with a certain Nepman spirit’ — which was, in 1931, almost as grave an indictment as the charge of being infected with Trotskyism is in 1936. To illustrate his point, the Soviet dictator charged that the coöperatives stocked goods like haberdashery in preference to the necessities because haberdashery was the ‘more profitable.’ Elsewhere, throughout the coöperative world, consumer coöperatives have stocked inferior merchandise and medicinal quackeries partly because these things are ‘ profitable ’ in terms of the things which coöperative managers value and which coöperative members value in their managers.
Wise consumers, keeping in mind the exacting test of price per unit of service, value, or performance, will be in no hurry to embrace an illusion of economic democracy which may entail the surrender of some of their most important interests. On the record to date, private competitive enterprise, with all of its faults, appears to be the best available servant of consumers’ interests.
- The author has been a co-director of Consumers’ Research, Inc., for many years. When the presidential commission recently sent abroad to investigate European coöperatives makes its report, there will doubtless be many avenues to explore. It is our intention to discuss other aspects of the cooperative movement. — EDITOR↩